March 26, 2017

Gross Domestic Product Edges Up

Following a 1.7% growth rate in the gross domestic product in the 2nd quarter, the GDP grew 2.0% in the 3rd quarter, according to a report [.pdf] released today from the Bureau of Economic Analysis. This rate of growth, however, is sluggish in comparison to the past. The typical GDP growth rate over the past 40 years is 3.0%. Despite the modest growth of recent quarters, the GDP has improved for 5 consecutive quarters (3rd quarter of 2009 to present), as the chart below shows, which is a much better trend than the consecutive declines in the GDP from the 3rd quarter of 2008 to the 2nd quarter of 2009. Other facts about the 3rd quarter include:

  • The personal saving rate was 5.5% in the 3rd quarter, which is slightly lower than the 2nd quarter result of 5.9% – indicating less savings by consumers.
  • The price index for domestic purchases increased 0.8% in the 3rd quarter, which is far more than the 0.1% of the 2nd quarter – indicating higher consumer prices.
  • Two primary reasons for the GDP growth in the 3rd quarter are increases in consumer expenditures, such as energy, as well as private businesses increasing their inventories in the 3rd quarter at almost double the rate of the 2nd quarter.

    4 consecutive declines have been followed with 5 straight increases.

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